* Cost of decommissioning estimated at 40.6 bln pounds
* Tax relief given at 50-75 percent of spending
* Independent Scotland will seek contribution from Britain
By Claire Milhench
LONDON, Sept 12 (Reuters) - Scotland will ask Britain tohelp finance the cost of removing old North Sea rigs andpipelines even if it votes for independence and gains most ofthe oil revenues, a move that bankers and lawyers say may resultin years of legal battles.
An independent Scotland would benefit from most of the newrevenues from North Sea oil output - worth $50 billion a year -but it will nevertheless ask Britain to co-finance some $60billion of decommissioning to remove old platforms andpipelines.
"Successive Westminster governments have accrued around £300billion (in today's prices) in tax receipts from Scotland's oiland gas, and therefore the Scottish government will seek acommensurate contribution to the costs of decommissioning fromWestminster," a Scottish government spokesman said.
The UK Treasury declined to comment on its position on theissue. But a Treasury spokesman directed Reuters to an analysisissued in June 2014. This said that an independent Scotlandwould have to invest almost 3,800 pounds (6,174.62 US dollar)per head for decommissioning, over ten times more than when thecosts are spread across the whole UK.
Lawyers and bankers said that deciding who pays what willcomplicate investment decisions for oil companies.
"We certainly will have a dispute. The liabilities are justtoo large," said Andrew Moorfield, Europe-based head oforigination at Canada's Scotiabank, which is among importantlenders to the North Sea oil industry.
There are about 300 rigs in the UK North Sea and the cost ofdecommissioning is expected to exceed 40 billion pounds ($65billion) until 2040, with expenditure peaking at 1.7 billionpounds as early as 2016, according to industry estimates.
The British government has allowed operators to offsetbetween a half and three quarters of this spending via taxrelief, which means that over 20 billion pounds will not be paidto state coffers.
"The over-riding question of which administration pays whatwould need to be sorted out first and that is an item on the'to-do' list facing post-Yes negotiators," said Richard Heard,managing director of Strategic Decom, a consultancy specialisingin decommissioning.
Stephen Murray, a partner at law firm Herbert SmithFreehills, said there could be bureaucratic delays with regardto consents needed for decommissioning if officials arepre-occupied with negotiations on separation arrangements.
MARITIME BOUNDARIES
Scotland goes to the polls on Sept. 18 and the latestsurveys show that the pro-independence camp has gained ground.
The Scottish government said the outcome of talks withWestminster on how the cost of decommissioning tax relief willbe split would have no impact on the value of the reliefreceived by operators.
But alongside the uncertainty around decommissioning costs,the industry is worried that future investment in the North Seacould be jeopardised by a dispute over maritime boundaries ifScotland becomes independent.
"It is to be hoped that the two governments could come to adecision quickly and avoid a dispute, which does have thepotential to stall investment in the disputed area," said JudithAldersey-Williams, a partner at law firm CMS.
"However, it's perhaps more likely that the question of theboundary will be used as a negotiating weapon and only resolvedas part of a package of contentious issues," she added.
The biggest operators in the North Sea such as oil majors BP and Royal Dutch/ Shell see the decommissioningprocess as a litmus test for other regions which will one dayhave to go through the same challenges as the North Sea.
Companies declined to comment specifically on challenges tothe decommissioning process arising from the potential Scottishsplit from Britain.
"We face the challenges of extending the productive life ofexisting assets and managing the future costs ofdecommissioning. Much of this activity requires fiscal supportto be economic, and future long-term investments require fiscalstability and certainty," BP's CEO Bob Dudley said this week.
His counterpart at Shell, Ben van Beurden, also said thisweek he thought Scotland was better off with Britain: "Asexisting infrastructure gets older and output falls, costs willgo up and tax receipts will come down."
Scotiabank's Moorfield said some investment could ultimatelymigrate to other areas such as Norway's North Sea: "Futureinvestment flows are likely to be negatively impacted ordeferred until there is a clarity on decommissioning".(1 US dollar = 0.6154 British pound) (Additional reporting by Dmitry Zhdannikov, editing by WilliamHardy)
